VOT Research Desk
Nov 3
Market Analytics and Considerations
KEY POINTERS OF THE NOVEMBER FOMC MOVE
According to predictions, the Fed increases its benchmark rate of interest by 0.75 percentage points to 3.75%-4.00%.
The FOMC statement modifies with a forward direction by stating that it will consider the aggregate consequences of tightness when determining policy.
In order to set the tone for the U.S. dollar, Powell’s news conference at 2:30 ET may help dispel concerns about the tightening prospects.
After Powell made it abundantly clear that it is too soon for the market to consider a halt in raises, the immediate dip in the currency and bond yields was totally reversed. This evaluation makes it obvious that the central bank won’t switch to a rate-raise pause anytime soon.
Market response
A steep decline in Treasury yields immediately following the FOMC announcement caused the US dollar to trade considerably lower, with the DXY falling by almost 1%. This unfavorable response, though, was slightly mitigated by Powell’s comments during the media briefing, where he said that the central bank still has “many ways can go” in tightness and suggested that the eventual path of interest rates may well be higher than originally anticipated.
The Federal Reserve concluded its November meeting this afternoon, approving another front-loaded tightening measure in its quest to tame sky-high inflation running at the fastest pace in 40 years.
At the end of the two-day gathering on Wednesday, the FOMC voted to raise borrowing costs by 75 basis points to 3.75%-4.00%, in line with expectations, marking the sixth successive adjustment and the fourth consecutive three-quarters of a percentage point hike during this cycle.
With this action, the FOMC’s inflation target has risen to its highest and most stringent range since early 2008, demonstrating the commitment of the central bank to reestablishing economic stability. The unanimous verdict indicates that authorities continue to hold a strong consensus over the necessity for a robust policy approach to deal with the economy’s heightened inflationary pressures.
